To: Department of Telecommunication and Energy

Final Draft 2.20

280 Summer St, Boston, MA 02210 ∆ ph 617.261.7111 ∆ fax 617.261.7887 ∆ ∆

Date: February 28, 2003

To: Department of Telecommunication and Energy

From: Dr. Jonathan Raab, Raab Associates, Ltd.

Re:Massachusetts Distributed Generation Collaborative Initiated by DTE Order 02-38-A

On behalf of the Massachusetts Distributed Generation (“DG”) Collaborative, please find attached the Collaborative’s final report. The report describes a comprehensive approach for DG interconnection in the Commonwealth covering all sizes of DG on both radial and secondary network systems. It includes a detailed process narrative, timeframes, a fee structure, an alternative dispute resolution (ADR) process, interconnection requirements, a mechanism for tracking interconnections experience over time, and an application form.

The following stakeholder organizations have participated in the Collaborative and fully endorse this report, acknowledging that this represents a reasonable starting place for interconnection standards. The stakeholders have worked diligently to develop this comprehensive, inter-related package of recommendations through the give and take of in-depth negotiations. The report represents a consensus on all issues, unless otherwise noted in the text (REMOVE IF NO DISSENT).

Final Draft 2.20

The stakeholders request that the DTE accept their consensus recommendations (and rule on the very few issues where full consensus was not achieved, taking into account the reasons for the parties’ dissent-REMOVE IF NO DISSENT) and issue an Interim Order specifying DG interconnection standards for the Commonwealth. The Stakeholders have agreed to continue the Collaborative with quarterly meetings over a two-year period to jointly examine the interconnection experience as it unfolds in Massachusetts as well as across the country, with an eye toward further improving the standards proposed herein over time. The Collaborative will report back annually to the DTE with its findings and any recommendations for further refinements and improvements.

The stakeholders have further agreed that the interconnection process should be codified as an interim tariff consistent across all the utilities. While virtually all of the materials that would be contained in such a tariff are in this report, we were not able to finalize the tariff in the time allotted. We respectfully request an additional [3-4 weeks (discuss with group] to finish it.

On behalf of the Collaborative, we appreciate the Commission’s sanctioning of this process and trust that the Commission will find its time well spent.

Proposed Uniform Standards for Interconnecting

Distributed Generation in Massachusetts

Submitted to:

Massachusetts Department of Telecommunications and Energy in Compliance with DTE Order 02-38-a

by the

Distributed Generation Interconnection Collaborative

February 28, 2003

Mediated by Jonathan Raab, President, Raab Associates, Ltd.

and

Suzanne Orenstein

Technical Consulting From Navigant Consulting, Inc.

Table of Contents

Section 1: Introduction and Collaborative Process Overview

Section 2: Goals and On-Going Collaborative

Section 3: Process for Distributed Generation Interconnection in Massachusetts

Section 4: Time Frames and Fee Schedules

Section 5: Overview of Network Interconnection Opportunities and Challenges for DG

Section 6: On-Going Collaboration and Information Tracking

Section 7: Dispute Resolution Steps

Appendices

Appendix A: Application Form

Appendix B: Interconnection Requirements

Appendix C: Information Tracking Form (Illustrative Example)

Appendix D: Interconnection Tariff

Appendix E: Collaborative Membership and Participation

Final Draft 2.20

Section 1: Introduction and Collaborative Process Overview

The Massachusetts Distributed Generation Interconnection Collaborative (“Collaborative”) was initiated at the request of the Department of Telecommunications and Energy (“DTE”) through Order 02-38-A. In that Order, the DTE detailed its expectations for the Collaborative as follows:

“The Department encourages the collaborative to focus on, among other things, the best features of existing interconnection standards, policies, and procedures. The content of the interconnection standards should be guided by, but not be limited to:

a.Simplified, state-wide technical interconnection standards for small distributed generation;

b.Simplified, state-wide technical standards for all remaining distributed generation;

c.A state-wide interconnection agreement;

d.Interconnection procedures, standardized to greatest extent possible, including provisions that clarify interconnecting to a network system (compared to a radial system) and equipment pre-approval so that conforming components receive pre-approval by the electric distribution companies;

e.A time schedule for responding to interconnection applications;

f.A plan to develop and post a generic document describing interconnection procedures;

1. An administratively efficient dispute resolution process.”

The Collaborative’s first meeting was in November 2002. The Massachusetts Technology Collaborative (hereinafter “MTC”) provided funding for mediation and technical support for the Collaborative. Raab Associates, Ltd. with Suzanne Orenstein provided mediation services, and Navigant Consulting, Inc. provided technical consulting services.

Over twenty organizations actively participated throughout the four-month Collaborative. These organizations are listed below under five separate clusters: DG Providers, Government/Quasi-Government, Consumers, Utilities, and Public Interest Groups. Appendix E presents a full roster of all the participants from each organization that participated in the Collaborative.

DG Providers
Aegis Energy Services
SEBANE
E-Cubed
Ingersoll-Rand
Northeast CHP Initiative
NECA
Real Energy
UTC
Keyspan
Plug Power
Trigen Energy
Government/Quasi Government
DOER
MTC
Cape Light Compact
Consumers
AIM
Wyeth
Utilities
Unitil/FG&E
ISO-NE
NSTAR
WMECO/NU
NGRID
Public Interest Groups
UCS
CLF
Mass Energy Consumers Alliance

The Collaborative met in plenary for eleven days of meetings. In addition, numerous working groups met consistently throughout this period to develop detailed proposals for review by the full Collaborative. An interim filing was provided to the DTE at the end of December, along with a request for additional time to complete its work, which the DTE subsequently granted.

With this report, the Collaborative has completed its recommendations on all the issues identified by the Commission. These recommendations represent a consensus of the diverse members of this Collaborative [accept on X issues noted in the text ADD ONLY IF STILL DISSENTS]. The Collaborative is requesting that the Department adopt these recommendations as interim rules, as the Stakeholders have agreed to continue meeting over the next two years to review experience gained in the Commonwealth and elsewhere with an eye to further improving the DG interconnection process.

Section 2 of this report lays out the Collaborative’s goals and a description of the plans for an on-going Collaborative. Section 3 provides both a narrative description of the proposed DG interconnection process and detailed figures mapping the process for interconnecting to both radial and network circuits. In Section 4, we outline both the timeframes and fee schedules for interconnection. Section 5 describes the opportunities and special challenges of interconnecting to network circuits. Sections 6 and 7 delineate the on-going collaborative and proposed dispute resolution process, respectively.

The appendices contain important additional documents. Appendix A includes the proposed standard application form. Appendix B includes the detailed technical interconnection requirements, and Appendix C includes the information tracking form. Appendix D will contain the interconnection tariff (still being worked on by the Collaborative). Finally, Appendix E contains all the stakeholders and organizations that have participated in the Collaborative process.

Section 2: Goals and On-Going Collaborative

The Collaborative has agreed on the following goals to guide DG interconnection now, and in the future:

For Both Radial and Network Interconnections:

1. Seek uniformity between the Companies where applicable without sacrificing existing efficiencies in current interconnection standards or other customer services.
2. Incorporate the best features of existing interconnection policies and procedures nationally, and take into account the FERC ANOPR process.
3. Maintain or exceed the current level of system reliability.
4. Maintain or exceed the current level of safety to the Company work force and the public.
5. Seek to expedite the timeframes for interconnection approvals.
6. Seek to establish minimal fees appropriate to the scope of work, based upon experience.
7. Develop a process that allows aCustomer/Installer to determine within a cost-effective timeframe whether a given project is viable economically and procedurally (i.e., how it will fare in the interconnection process).

Additional Goals for Spot and Area Network Interconnections:

1. Seek expeditious and cost-effective approaches for interconnecting on spot and area networks.

Description of Proposed On-Going Collaborative:

The DG Collaborative has agreed to meet quarterly over the next two years to examine the experience with interconnections in Massachusetts and elsewhere in the United States, in an attempt to further streamline the approval timeframes and potentially reduce the fees associated with interconnection. In order to continuously improve the DG interconnection process, information about the time required, costs, screening steps, and dispute resolution will be tracked by the utilities and aggregated on a quarterly basis. The aggregated information will be reported to the DTE annually, and it is expected that the DTE will make the information available to other agencies and to the public. The DG Collaborative parties will review the information and suggest any improvements to the process that they agree are necessary or desirable after one and two years of experience with DG interconnection under the process recommended by the Collaborative. [See Section 6 below for more details on the on-going Collaborative]

.

Section 3: Process for Distributed Generation Interconnection in Massachusetts

There are three basic Company review paths for interconnection of DG in Massachusetts.[1] They are described below and detailed in Figures 1 and 2 with their accompanying notes. Tables 1 and 2, respectively, describe the timelines and fees for these paths.

1. Simplified – This is for qualified inverter-based facilities with a power rating of 10 kW or less on radial or spot network systems under certain conditions.
2. Expedited – This is for certified facilities that pass certain pre-specified screens on a radial system.
3. Standard – This is for all facilities not qualifying for either the Simplified or Expedited interconnection review processes on radial and spot network systems, and for all facilities on area network systems.

All customers must submit a completed application and pay the appropriate application fee to the Company it wishes to interconnect with. The application will be acknowledged by the Company and the Customer will be notified of the application’s completeness. Customers who are not likely to qualify for Simplified or Expedited review may opt to go directly into the Standard Review path. Customers proposing to interconnect on area networks will also go directly to Standard Review. All other customers must proceed through a series of screens to determine their ultimate interconnection path. (Customers not sure whether a particular location is on a radial circuit, spot network, or area network should check with the Company serving the proposed DG location prior to filing and the Company will verify the circuit type upon filing.)

Customers using qualified inverter-based facilities with power ratings of under 10 kW requesting an interconnection on radial systems where the aggregate generating facility capacity on the circuit is less than 7.5% of circuit annual peak load qualify for Simplified interconnection. This is the fastest and least costly interconnection path. There is also a Simplified interconnection path for qualified inverter-based facilities on spot networks under certain conditions.

Other customers not qualifying for Simplified review or not in Standard Review must pass a series of screens before qualifying for Expedited interconnection. If one or more screens are not passed, the Company will offer to conduct a Supplemental Review. If there is any additional fee associated with Supplemental Review not already covered by the application fee and the Customer agrees to pay it, the Company will conduct the review. If the Supplemental Review determines the requirements for processing the application through the Expedited process (including any system modifications), then the modification requirements, reason for needing them, and costs for these modifications will be identified and included in the executable Expedited interconnection agreement.

It is important to note that as part of the Expedited interconnection process, the Company will assess whether any system modifications are required for interconnection, even if the project passes all of the eight screens. If the needed modifications are minor, that is, they can be determined by the Company within the engineering time covered by the application fee (maximum 10 hours), then the Company will identify the modification requirements, reason(s) for them, and cost to perform them, all of which it will include in the executable expedited interconnection agreement. If the requirements cannot be determined within the time and cost alloted in the Initial Review, the Company may require that the project undergo additional Supplemental Review to determine those requirements within the time allocated for Supplemental Review (maximum 10 hours of engineering time). If after these reviews the Company still cannot determine the requirements, the Company will document the reasons why and will meet with the Customer to determine a new schedule to their mutual satisfaction (this is not the Standard Review process). In all cases, the Customer will pay for the cost of modifications that are attributable to its proposed project.

If the facility fails one or more screens and system modifications requirements cannot be determined during the time allotted for Supplemental Review, then the facility enters Standard Review and the Company will provide cost estimates and a schedule for the completion of interconnection study(ies). Upon acceptance by the Customer of the costs, the Company will perform impact and facility studies as required. The Standard interconnection process has the longest maximum time period and highest potential costs.

When the interconnection review is complete and the Company issues an executable agreement under the Expedited and Standard Review paths, the Customer will need to return a signed agreement, complete the installation, and pay any system modification costs identified in the agreement. If the Customer does not sign the agreement or complete construction within a certain time period, it loses its place in the queue and may need to reapply for interconnection. The Company may inspect the completed installation for compliance with standards and schedule a witness test. Assuming the inspection is satisfactory, the Company notifies the Customer that interconnection is allowed. A parallel but simpler process exists for Simplified interconnections.

Table 1 lays out the maximum timeframes allowed under the Simplified, Expedited, and Standard Review processes for each step in the review processes (application approval, review of screens, Supplemental Review, facility and impact studies, and sending an executable agreement – note that some of these steps are not required for every review process) and for the processes as a whole. The maximum time allowed for the Company to execute the entire Simplified process is 15 days; 40 days for the Expedited process on a radial system where no Supplemental Review is needed and 60 days where it is; 125 days for the Standard Review process if the Customer goes directly to Standard Review and 150 days if the Customer gets bounced out of the Expedited process into Standard Review. For Customers qualifying for the Simplified process on a spot network, the maximum time is 40 days if load data is available and 100 days if it is not. The maximum times refer to Company working days, and the Company clock is stopped when awaiting information from Customers.

Table 2 lays out the commercial terms (i.e., fees) required for Customers to apply for interconnection. There are no fees for those facilities that qualify for the Simplified path (except in certain unique cases wherea system modification would be needed which would be covered by the Customer). Those qualifying for Expedited review on a radial system will pay a $3/kW application fee (minimum of $300 and maximum of $2,500) plus $125/hour up to 10 hours ($1,250) for Supplemental Review, when applicable, plus the actual cost of any required facility upgrades. Those on the Standard Review path would pay the same application fee as in the Expedited path as well as the actual cost of any required facility upgrades, plus the actual cost of any impact and facility studies, if required. Facilities qualifying for the Expedited process on a spot network will pay a flat application fee of $100 for 3kW or less, and $300 for facilities above 3 kW, plus any system modification costs.

Dispute resolution procedures will be available to address disagreements about the DG interconnection process for specific projects. The dispute resolution process includes three steps: (1) negotiation with elevation to senior management, (2) neutral mediation that includes a neutral technical expert if appropriate followed by non-binding arbitration if the parties cannot reach agreement, and (3) an adjudicatory hearing at the DTE. The negotiation step will be initiated and conducted by the disputing parties themselves. The mediation/non-binding arbitration step will be conducted by a private mediator, with technical experts as needed, and will be convened by the DTE. If these two steps are not successful, the parties will request a hearing at the DTE. It is anticipated that the DTE hearing will be somewhat expedited by the availability of information developed in Step 2, and that all parties will work to proceed as quickly as possible to resolution of the dispute.